October has seen a further decline in iron ore spot values as Chinese demand suffers due to renewed weakness in domestic steel prices. Although underlying consumption growth for iron ore in China remains extremely robust, suppliers will be concerned at the mounting disparity between steel values within China and in other regions. This is leading to an increasingly lopsided global steel market and has the potential to undermine pricing prospects for iron ore as contract price negotiations draw near. The trend in global steel pricing in turn reflects the dramatic disparity between steel production growth in the various regions. Whilst Chinese production is up 28 percent year-to-date (August), output in the USA has fallen by 4.6 percent and in the EU-25 by 3.4 percent. Production is also down in the CIS and South America. Consequently, while steel supply/demand fundamentals have tightened in Europe and North America leading to a rebound in prices, the opposite has happened in China where steel prices are falling.
展开▼
